Shareholders sue Rambus

Having been stung with a $7.12 million payment to cover Infineon's legal expenses, Rambus now faces the prospect of further payouts to its own shareholders.

New York-based law firm Beatie and Osborn filed a class-action suit against the memory developer late last week on behalf of shareholders. The suit alleges that Rambus violated US securities regulations, specifically that the company persuaded would-be investors to buy RMBS stock by claiming it would be able to deliver revenues from royalties on patents that it didn't actually own.

The suit follows last week's ruling in the US District Court that the jury overseeing Rambus' legal action against Infineon was right to conclude that Rambus committed fraud. Rambus withheld details of SDRAM patents it had filed from JEDEC, the chip industry standards body, while a member of that organisation's SDRAM specification-setting committee. By knowing the spec. in advance, Rambus could patent the technology beforehand and reap the rewards after the final SDRAM spec. was declared a standard.

The upshot of that judgement is that Rambus may not be able to realise the revenues it promised it would be able to generate from licensing its SDRAM technologies.

That, in turn, has knocked Rambus' share-price right down, to below $10, so it's no wonder investors are pissed off. Rambus' promises of rich royalty rewards drove its share price up to $450, the suit claims. ®